Welfare Payments in Bankruptcy

People who rely on the government's Temporary Assistance for Needy Families support often wonder what happens to these welfare payments in bankruptcy.

It's an important question to ask: receiving welfare payments in bankruptcy can make a world of difference to a bankruptcy filer's financial health.

Here's a look at what happens to welfare payments in bankruptcy cases.

Will I Still Receive Welfare Payments in Bankruptcy?

Those who qualify for welfare payments throughout the duration of their bankruptcy case should be able to continue receiving welfare during bankruptcy. But there are some important issues to consider before filing for bankruptcy while on welfare.

Bankruptcy fees. Whether a person files for Chapter 13 or Chapter 7 bankruptcy, the court charges certain fees to process the bankruptcy case. If a filer cannot afford to pay these fees, he or she may apply for a fee waiver. The form to apply for a waiver is available at the courthouse and online.

Type of bankruptcy. In most cases, filers who are currently receiving welfare benefits do not have sufficient income to qualify for Chapter 13 bankruptcy. That means these filers will likely file under Chapter 7 of the U.S. Bankruptcy Code. In order to prove that a filer is eligible for Chapter 7 bankruptcy, she must pass the Chapter 7 means test.

Overall financial circumstances. Those who become employed during the course of a bankruptcy case may have to adjust the terms of the bankruptcy or welfare payments. Any changes in a filer's financial situation that occur during a bankruptcy case must be reported to the bankruptcy trustee.

How Do I Know If Bankruptcy Will Help Me?

Bankruptcy is an effective way of eliminating certain debts, but it is not right for everyone. People interested in learning whether bankruptcy might help them can take one of two steps:

Complete a credit counseling session. This session is required for all bankruptcy filers. In it, the credit counselor can help a potential filer determine whether bankruptcy would make financial sense.

Visit a bankruptcy lawyer. Most bankruptcy lawyers offer free initial consultations. During this visit, a lawyer can explain to the potential filer whether or not bankruptcy is a good match.

If you'd like to arrange a free legal consultation right now, simply fill out this form. You can connect with an attorney in your area today and learn if bankruptcy is right for you.